Tuesday, 29 September 2009

This is a surprisingly candid interview with a smart player from the world of finance, on CNBC.

Notice how the hosts are quiet and actually listening to the guest for a change, not butting in with some smart-alec comment or put-down every few seconds. This is highly unusual at any time, but especially when the guest is talking down the almighty dollar or, horror of horrors, suggesting gold might significantly appreciate. Normally this kind of talk would invite a cat's chorus of derision from the hosts.

Notice also how the topic is matter-of-factly discussing the cutting in half of the dollar's value over the next few years, and how this is unavoidably necessary in order to stand any chance of meeting the US' massive current and future debt obligations, and that this is not disputed because the case presented as to why is copper-bottomed and indisputable based on clear and easily verified facts. For sterling-based readers in the UK, think also about the UK's current and future debt obligations, in the face of rapidly declining tax revenues, and you can see that we are in a similarly precarious position right now, and the only answer is the same as for the US: print more pounds and thereby cut the value of each pound in half so the public debts are more manageable.

You'd better hope the authorities in both countries can manage to keep the confidence of the rest of the world up, so they don't get a lot more depreciation than they wanted, and it gets really out of control. To my mind, that is a very, very big ask indeed.

Thursday, 24 September 2009

It's not their fault, it is what they have been taught that is wrong. As usual, if you follow the money trail you can understand who teaches them it, and why.

Howard Katz talks a lot of sense, but occasionally he strays into religion which is most definitely not my cup of tea. However, often he writes good-sense articles on economics -- if you can focus only on this stuff and tune out the other, it's very useful I think.

Currently, we are in the early part of a depression. Some of you will be losing your jobs, but most of you won't. You will not get a great payrise for some time unless you get a promotion or switch jobs, maybe you will take a pay cut and perhaps even quite a chunky one -- but look in the shops and you'll see more and more things are half what they cost before, so you can still buy the things you need no problem. More of them in fact. So you have less money, but you have more wealth. Read the article and this will make more sense to you I'm sure.

Wednesday, 23 September 2009

There is much surprise and speculation about the reason that every single analyst in the City has been summoned to attend a crisis meeting at the Bank. Rightly so, given that this is something that just never happens!

If you ask me, if something smells like a rotten fish stuck behind the cooker, it's probably a rotten fish stuck behind the cooker. Calling in every single analyst, to schmooze them and try to ensure they all toe the Party line that "Quantative Easing is NOT money printing just the same as Zimbabwe was doing not so long ago, and none of you should say that in public again please -- now, enjoy some more of this lovely champagne and simply gorgeous blinis won't you chaps?", just won't change the fact that Quantative Easing is exactly that. I mean you don't need to think about it too hard to realise the name could not be much more explicit, what else could they possible have meant by that name than adjusting the quantity of money in the system? And that my friends, is just what Gideon Gono was doing in Zimbabwe, and the Germans were forced to do in the Weimar Republic a few decades back -- these are just a couple of high-profile examples, but there are many other examples throughout the course of fiat money history.

Only a massive confidence trick can now prevent the same results occuring here in due course. I truly hope they can keep the wool pulled over enough people's eyes, because things will be nasty if/when push comes to shove. But I don't count on it.

Who knows what it'll be next? A carbon tax on the air you exhale? Green tax on the methane you emit at the other end? (Not so far fetched, I read it is being discussed to tax farmers based on the number of cows they have and the amount of green-house-gas-methane they emit). Veggies beware, it might be on a sliding scale basis, who knows..?

Tuesday, 22 September 2009

It ain't rocket science. If you print up more currency, the value of all the other pre-existing currency will reduce due to dilution. It's elementary supply-and-demand. You create significantly more supply, there'd better be significantly more demand or there will be tears before long.

When it comes to currencies, everything is relative -- because all currencies today are backed by nothing but promises and confidence. All governments are on a printing and spending spree right now. However, nobody is printing and spending on the public creditcard with more abandon than the UK government. This is the extremely simple explanation of why the pound has been sliding against all other currencies, it is of no surprise to me (or you, if you have been reading for any length of time).

It is also the extremely simple explanation for why people buy gold and/or silver, or some other tangible store of value, when push comes to shove and the government resorts to printing paper fiat money to cover their past and present mistakes. (And there have been a LOT of mistakes to be paid for over the last decade...)

Here in the UK we have massively increased supply of pounds in the system, and there is dwindling international demand for them at the same time. That is a deeply toxic brew right there! At some point, before too long now, the world is going to finally choke on this huge supply of pounds, and it'll puke them right back in Gordon Brown's face. I wouldn't be surprised to find that I wake up one day and the pound is worth half what it was the day before. Whatever you decide to do about this to protect yourself, don't keep all your eggs in Gordon's basket -- he will trample all over them without batting an eyelid. Then he will reverse back and run over them again and again. Finally after you die he will then take half of whatever you managed to keep hold of and thought you would pass on to your loved ones. Then he will finally be happy and leave you alone. Gotta love socialists, always looking after the little guy like you and me.

Monday, 21 September 2009

In the media you can see report after report suggesting that we are out of recession and a sustainable economic recovery is under way. This is just perception-management, with the governments of the world all hoping and praying that you will all get out to the shops and spend money, ideally on credit if possible, and that you will resume buying houses at ever-inflating prices, again on credit with mortgages.

But my own feeling is that the worm has turned -- people are now switched from being credit-happy, to debt-wary. This is a secular change in consumer habits, whether politicians like it or not, which will play out over a number of years and if they attempt to fight it then they will only make it take longer and be a whole lot worse. This is bad overall for the economy, which is geared up for ever-expanding debt and inflation of money supply, leading in turn to inflation of consumer prices. If this system goes into reverse, as it has, then we need to find a whole new economic model and start using it lickety-split! Instead, politicians hope to get the old system they knew and loved to restart, but they will be unsuccessful and future historians will point to today's politicians as being culpable for what is about to come, for this very reason of their denial of the inevitable. History will not be denied, I don't care if Gordon and Barak don't like it.

But don't trust me -- who the hell am I to speak, with my council estate comprehensive education, a Youth Training Scheme in lieu of any further education, and my staunchely non-specialist attitude to work and life? How could I possibly know about anything better than all the highly-training Cambroxetonian specialists running every aspect of the country and its economy?

You could try listening to guys like these though? They specialise in global economic analysis, and they will tell you exactly what I tell you. They have been right all the way along, in spite of disagreeing with the powers that be and the mainstream media, so I wouldn't bet on them being proved wrong now.

Rig for another storm. More likely two, and probably both worse than the last...

Thursday, 10 September 2009

I mean, it just sits there in a cupboard somewhere, or in an online account. Its a pain in the ass to clean (not that I worry once I've deep cleaned it once after purchase -- light tarnishing just adds to its qualities after that if you ask me). What possible use could it be to me? Nobody else seems to want it.

Ahh, well there is your answer -- nobody else seems to want it.

In this world, you can either pay top price for something that everyone else seems to want (think houses for a recent experience here), or you can pay bottom price for something nobody seems to want (think silver for recent experience here).

Monday, 7 September 2009

If this doesn't make banks lend out the money they have been parking at the Bank of England, nothing will.

The alert among you will notice that banks are in business to lend money, that is how they make money. If they are not lending, it can only be for a very good reason -- they think they will not get it all back again! This doesn't suit the government's agenda though, clearly, so they will force the banks to take on risk that they were not otherwise prepared to. You should expect more economic misery and bank bailouts in the future as a result of this government mandated policy then. Nice going guys! Idiots. :-\

Disclaimer

The content on this site is provided without warranty, express or implied. All opinions are those of the author and may contain errors or omissions.

No material here represents investment advice and you should not base your investment decisions on what you read here without performing your own due diligence and/or seeking professional advice, as appropriate. Actions taken as a consequence of any analysis, opinion or advertisement on this site are taken at your sole responsibility.